Repositioning West Africa’s stumbling power sector

In recent years, West Africa countries like Ghana, Nigeria, Liberia, among others have experienced challenges in their power sectors as they wrestle with power outages and struggle to install more power generation capacity as the population increases.

The situation is further compounded with energy sector heavily indebted and the government unable to offer guarantees to power investors.

In Ghana for instance recent report indicates that electricity sector is $2.4 billion in debt as government agencies have not been good about making payments to the Electricity Company of Ghana, so it is not able to pay the Volta River Authority.

The same scenario is currently playing out in Nigeria with mounting debt. Market payment statistics shows that on a monthly basis, generation companies’ invoices amount to about N35 billion to N40 billion, out of which only about N7 billion is paid. The implication is that the debt profile of the Gencos is about N30 billion per month.

Recent report indicate that Discos’ remittances to NBET for energy has fallen from an average of 65 percent in 2015 to 35 percent over 2016, whilst monthly revenue shortfalls have increased from an average of N9 billion in 2015 to N25 billion in 2016.

The value of electricity revenue loss in 2016 alone was N534 billion owing to shortages in gas supply, frequency and line limitations and water levels management constraints.

Only recently Power Africa, a development initiative from the United States promised to help get Nigeria and her neighbouring country Ghana of the power sector hiccup by giving millions of dollars facility.

In December 2016 Ghana elected a new president, Nana Akufo-Addo of the New Patriotic Party. Akufo-Addo has made addressing the power outages a priority, and has been aggressively pursuing answers. Already, his administration has launched a review of current power agreements entered into by the previous administration and plans to “prioritise, renegotiate, defer or cancel outright” contracts.

Report showed that Ghana passed the new Petroleum Law in September 2016. Long overdue, the act was debated in parliament for four years and certainly hamstringed development thereby impacting potential fuel supplies for the power generation sector.

Eyram Adadevoh, Senior Associate Attorney for Centurion Law Group was quoted to have said that in terms of electrification and pervasiveness of access, Ghana is ahead of some of its counterparts in Sub-Saharan Africa.

Analysts posited that lack of transparency in the energy sector have been identified as a reason why Nigeria, Ghana and other West Africa countries still struggle to reap the full benefits from a sector that is going to feed the power sector, ultimately,”

International Energy Agency report indicates that a lack of investment financing is one of the major barriers to expanding power capacity. Domestic political pressures have, until recently, ruled out meaningful electricity tariff increases across the region, as citizens demand ever more affordable energy during the economic slowdown.

The result has been dampened interest from electricity sector investors who fear they will not recoup their costs or are not impressed with the margins on offer. Nigeria has shown the path to progress.

KELECHI EWUZIE